What is landlord insurance?

Landlord insurance cover, or property owner's liability cover, is a specialised type of insurance designed to protect rental property owners from the unique risks that come with letting out a property. Unlike standard home insurance, which won’t cover many landlord-specific issues such as tenant-related damages, legal disputes, or loss of rental income, landlord insurance provides more comprehensive protection.

While you do not need landlord insurance as a legal requirement, it’s highly recommended because it offers protection from financial losses that could arise from unforeseen events.

At its core, landlord insurance typically covers the following:

• Property damage cover: this covers the physical structure of the property from damage caused by fires, floods, storms, or vandalism. It may also protect any contents provided to tenants, such as furniture or appliances, depending on your policy.
• Liability cover: as a landlord, you are responsible for injuries or accidents that occur on your property. Liability cover helps manage claims made against you if a tenant or visitor is injured due to faulty wiring, slippery floors, or other hazards on the premises. Without this, you may face substantial legal fees or compensation claims.
• Loss of rent cover: in the event that your property becomes uninhabitable due to an insured event, such as a fire or flood, loss of rent cover ensures you still receive income during the repair period. This protects you from unexpected loss of revenue, allowing you to continue managing your finances smoothly.

What landlord insurance do you need otherwise?

While landlord cover forms the foundation of your protection, you might need additional forms of insurance relevant to landlords depending on your specific circumstances. Here are a few other policies that may be relevant:

• Rent guarantee insurance: sometimes tenants may be unable to pay their rent. Rent guarantee insurance protects your income by covering any missed payments, ensuring you still receive your rental income even if a tenant defaults. This cover typically requires thorough tenant referencing before it can be added to a policy.
• Buildings insurance: covers the structure of your property against risks such as fire, floods, storms, and other unexpected damages. It typically includes permanent fixtures like walls, roofs, floors, and fitted kitchens or bathrooms. Although buildings insurance can be included in a landlord insurance policy, it’s essential to ensure that it covers the specific risks faced by landlords, such as damage caused by tenants or during void periods. If you don’t already have this included, adding buildings insurance helps safeguard the property’s physical structure from damage, preventing costly repair bills.
• Legal expenses insurance: if you ever need to evict a tenant, handle disputes over deposits, or face legal challenges, legal expenses cover helps with the cost of solicitors, court fees and other legal services. This helps mitigate the financial strain of legal proceedings, which can often become quite costly.
• Contents insurance: if you rent out a furnished property, contents insurance can cover damage or theft of items such as furniture, appliances, or curtains. It’s worth noting that tenant belongings aren’t covered by this insurance, so it’s advisable to encourage your tenants to obtain their own contents insurance for personal items.
• Employers' liability insurance: should you employ any staff, such as a cleaner, gardener, or property manager, this insurance is a legal requirement. Employers' liability insurance protects you in case your employee suffers an injury or illness as a result of their work on your property.
• Accidental damage insurance: this type of cover protects your property and its contents from accidental damage caused by tenants or their guests. It’s particularly useful if you want to avoid covering the cost of repairs out of pocket for minor incidents like broken windows or stained carpets.

What happens if I’m not insured?

Operating as a landlord without the appropriate insurance leaves you vulnerable to significant financial losses. Here are a few potential risks if you’re uninsured:

• Financial losses from damage: without property damage cover, you’ll be responsible for paying for any repairs if the building is damaged by fire, flood, or vandalism. Major incidents like these can cost thousands of pounds and seriously affect your financial stability if you don’t have insurance in place.
• Liability claims: if a tenant or visitor is injured on your property, and you don’t have liability cover, you could face expensive compensation claims and legal fees. Liability claims can arise from simple incidents, such as a tenant slipping on a wet floor or being injured by a broken handrail.
• Missed rental income: if your property becomes uninhabitable due to damage and you don’t have loss of rent cover, you’ll miss out on rental income while the property is being repaired. This could disrupt your cash flow, especially if you rely on rent as your main source of income.
• Legal disputes: legal expenses can quickly mount up if you become involved in disputes with tenants over evictions, rent arrears, or other issues. Without legal expenses insurance, you’ll need to cover the cost of solicitors and court proceedings yourself.

Could personalised landlord advice help me?

Every landlord’s situation is unique, and the type of insurance you need depends on the property you own, the tenants you let to, and the level of cover you feel comfortable with. Seeking personalised advice from a landlord insurance specialist can help you identify any gaps in your current coverage and ensure you meet legal obligations.

A professional advisor can help tailor a policy to fit your specific needs, helping you to choose the right insurance products for your situation. Advisors also keep up-to-date with legal requirements, ensuring you remain compliant with regulations such as employers' liability or local licensing schemes. By reviewing your insurance needs, they offer peace of mind, knowing your property and finances are properly protected, helping you to manage risks with confidence.

If you need further guidance on what insurance you need or want to know more about your obligations as a landlord, get in touch with AST Assistance today by calling us on 01706 619 954 or by using our contact form.